In response to coronavirus (COVID-19), the Treasury and the IRS recently announced changes to the tax deadline.
The federal tax filing deadline has been extended to May 17, 2021. Taxpayers getting a refund are encouraged to file their taxes now to get their money in this time of need.
This also means that you have until May 17, 2021 to make a 2020 contribution to your IRA and make an impact on your taxes. We’ve summed up what this deadline extension means for you below.
Extended Deadline for 2020 IRA Contributions and Workplace-Based Retirement Plans
Typically you can make an IRA contribution for the tax year up until the April tax deadline and make an impact on your taxes. For example, the IRS allows you to make a 2020 IRA contribution up until the tax deadline and possibly get a deduction on your tax year 2020 taxes.
Because the federal tax filing deadline has been extended to May 17, 2021, the deadline for making a 2020 IRA contribution is now also extended to May 17, 2021.
Extended Deadline for Tax Owed on Gross Income from IRA/Work-Based Retirement Plan Distributions
If you owe 10% additional tax on amounts includible in gross income from an early distribution that you took from your IRA or workplace-based retirement plan in 2020, the reporting and payment of the 10% additional tax has been extended to May 17, 2021.
This is because the additional tax is calculated, reported, and paid at the same time as the income tax owed on the amounts includible in gross income. If you file before May 17, the 10% additional tax will be calculated at the time you file since it is calculated with your tax filing.
If you took a coronavirus related distribution under the CARES Act in 2020, there is a waiver of the 10% penalty if you were impacted by coronavirus, and your distribution can be included in your taxable income over three years instead of all in tax year 2020, lowering your taxable income.
TurboTax Has You Covered
You can be confident that TurboTax is ready to help you stay informed and file now up until the extended May 17, 2021 federal deadline. Additionally, our team of TurboTax Live tax experts are available on-demand to help you out should you have any questions along the way. TurboTax Live tax experts can also do your taxes for you from start to finish, all from the comfort of your home.
As the IRS continues to issue additional guidance on COVID-19 tax relief, we will continue to keep you updated. Check back here for the most up to date news and information.